Brussels could be setting the stage for a new wave of consolidation in the European financial services industry. By demanding that banking groups that were granted massive state aid during the crisis shed large chunks of their assets on competition grounds, the European Union risks fuelling a merger and acquisition revival in the financial sector that may not be in the best public interest.

The break-up of ING announced this week is likely to have a domino effect on the sector and get a lot of banks and insurers thinking hard about their next moves.